Tweets by Donald Trump last Sunday have turned everything upside down, and in the center of investors' attention, is a possible disruption of the deal between the US and China and, as a result, the escalation of the trade conflict. Thus, concerns in the markets are increasing every day. Traders are trying to understand exactly what the head of the White House wanted to say. Perhaps, his words were part of the negotiation strategy, and thus, Washington is trying to get more concessions from Beijing. However, informed sources told Reuters today that Trump's threats are not at all harmless and can acquire real outlines.
Moreover, on Wednesday, before the beginning of the American session, the world stock indices literally took off an average of 0.5% in a minute after the appearance of a fresh tweet by the US President. "China informed us" that the country's officials will come to Washington to conclude a trade deal. After some time, the office of the country's Trade Representative announced an increase in duties on Chinese goods worth $ 200 billion.
About the dollar
Past episodes of trading tensions contributed to the growth of the dollar. But now, the situation is somewhat different. The US currency is weakening not only in relation to the yen, but almost in all directions.
This trend is due to the fact that growing concerns about the trade dispute between Washington and Beijing prompted market participants to raise their expectations of lowering the rates in the US later this year.
As for the euro, this currency was able to resist, despite the block of negative publications. The European Commission has worsened estimates of economic growth and inflation for the current year. Germany, on the other hand, has published disappointing statistics on industrial orders. Although the market was pleased with the information that the volume of industrial production in the country grew by 0.5% in monthly terms instead of the expected decline. However, the German Ministry of Economics made it clear that the prospects in this direction remain weak. The largest European economy suffers from uncertainty around Brexit and trade frictions. Meanwhile, good news from the negotiating table will create the prerequisites for the continuation of the EUR/USD rally.
Meanwhile, the British pound declined on Wednesday, after the UK confirmed its participation in the May elections to the European Parliament. This suggests that inter-party compromise on Brexit should not be expected in the near future. Theresa May was quick to report that work in this direction is underway. Thus, negotiations between Labor and the government continued on Wednesday.
